• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Graham Liddell: Speeding up the internal audit countdown

0
  • by Guest
  • in Blogs · Graham Liddell · Technical
  • — 29 Feb, 2016
Photo (cropped): Dafne Cholet, Flickr

Photo (cropped): Dafne Cholet, Flickr

Traditionally heads of internal audit boast to their peers about the number of days in their audit plans. But, as budgets are squeezed, a different question is being whispered, ‘How low can you go?’ Graham Liddell considers how s151 officers and heads of internal audit work together to deliver an efficient and effective audit service with fewer audit days.   

Budget discussions between s151 officers and all heads of service are becoming increasingly challenging and local authority service professionals respond by managing demand on their services and working with colleagues and partners to deliver more with less.

So how does this apply to the conversations between the s151 officer and the head of internal audit, where the s151 officer is both a customer looking to drive down costs and has a statutory responsibility to ensure that there is an effective internal audit function in place?

Internal audit budgets are pretty small beer and any decent head of internal audit should be able to demonstrate to the s151 officer that the benefit of the team to the local authority far exceeds its cost.

This is especially true during periods of major change when controls can be compromised, or lost, and maintaining a strong control environment becomes ever more important.

But internal audit teams, as agents of change and sharers of best practice, have a leadership role to play. Internal audit cannot be immune to the budgetary pressures that affect the rest of the organisation.

The head of internal audit needs sufficient audit days to be able to deliver an internal audit in accordance with professional standards. This includes:

  • delivering a safe opinion on the control environment
  • making and following up recommendations to address control weaknesses
  • ensuring that any additional work expected by the s151 officer and others doesn’t undermine the audit plan.

In light of budgetary pressures, heads of audit might be tempted to reduce costs simply by delivering fewer audit days and reducing the scope of the audit plan. This is usually easy to achieve by applying the audit equivalent of budget salami slicing:

  • tweaking the risk assessment criteria
  • extending the cyclical programme over a longer period of time
  • reducing added value work.

It works, of course, but there is an inevitable slide towards a diminished service that delivers lower assurance and fewer benefits to the local authority.

Alternatively, s151 officers and heads of internal audit can use budgetary pressures to consider more innovative solutions. Here are some challenge questions to help develop a strategy to minimise the cost of delivering an internal audit plan and maximise the opportunities to add value.

Challenge questions

1 Based on current ways of working what is the lowest number of days in which the 2015/16 internal audit could have been delivered?

  • Were there any audits that didn’t contribute to the overall audit opinion?
  • Are there any audits where we could have relied on work for previous years?
  • How much contingency is needed?

2 What is the expected impact on audit days from changes in 2016/17?

  • Are there any changes in the audit universe?
  • Are there any additional risks?
  • Are there any risks that no longer need to be considered?

3 Is there any learning that can be drawn from other similar local authorities?

  • Do any other local authorities deliver their audits in significantly fewer days?
  • What do they do that is different that could be applied locally?

4 What is the impact of any additional work expected of the IA team (counter fraud work, corporate support, meeting the expectations of external auditors, ad hoc investigations etc.)?

  • How many days are needed?
  • Can any of this work be used to contribute to the audit plan and reduce work elsewhere?

5 What opportunities are there to secure efficiencies (some of these will take more than one year)?

  • Can a wider range of audit techniques be used (including data matching and other analytical tools)?
  • Can increased reliance be placed on other sources of assurance (eg through mature risk management arrangements and formal assurance frameworks such as the three lines of defence)?
  • Can economies of scale be secured by working in partnership with other internal audit teams?
  • Can the skill mix of the team be optimised?
  • Are there opportunities to manage contingencies more effectively, for example through a call-off contract with a private sector supplier?

6 How much time is needed to develop the service?

  • Quality improvements?
  • Implementing major change?

There will of course be other ways to deal with these pressures. The key message is that s151 officers will need to work with their heads of internal audit to consider how best avoid the trap of salami slicing.

Graham Liddell

Graham Liddell

Graham Liddell is head of internal audit, Brighton & Hove Council. In his next article, Graham considers the relative merits of delivering internal audit services in-house, outsourcing and shared service arrangements.

Get the Room151 Newsletter

 

 

Calendar photo (cropped): Daphne Cholet, Flickr.

Share

You may also like...

  • The proposed changes to the LGPS: local valuation cycles and exits The proposed changes to the LGPS: local valuation cycles and exits 24 Jun, 2019
  • European data – numbers that matter European data – numbers that matter 26 Dec, 2011
  • How the Right to Buy undermines estate regeneration How the Right to Buy undermines estate regeneration 21 May, 2013
  • Unintended consequences of forward guidance in the bond markets Unintended consequences of forward guidance in the bond markets 14 Aug, 2013

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 8 hours ago

    Global macro outlook: Virus versus vaccine: Sponsored article: Salman Ahmed argues monetary policy, a global vaccine rollout and fiscal stimulus are likely to put “upward pressure” on bond yields. Much like the latter half of 2020,[...] dlvr.it/Rr60nt pic.twitter.com/qsymBWmKmV

    Room151 1 day ago

    ‘Chasing yield’ not the best strategy as negative rates loom: Recent speculation that the UK may be heading toward negative interest rates prompts questions for treasury officers managing local authority funds at LATIF. Speculation is rife that the UK… dlvr.it/Rr3Mrj pic.twitter.com/wtxYAB20PO

    Room151 3 days ago

    Will new public procurement rules offer the best commercial results?: The government has issued a green paper on reforming procurement rules. Helen Randall and Rebecca Rees examine the proposals and argue they may not go far enough. The Cabinet… dlvr.it/Rqtw6T pic.twitter.com/9GiVTkL08U

    Room151 1 week ago

    The vaccine may help settle cash flows but inflation remains a risk: Sponsored article: Lauren Sewell examines the prospects for long-term borrowing as Brexit settles and vaccines are deployed against Covid-19. On the 9th October 2019 Whitehall sent… dlvr.it/RqZXCr pic.twitter.com/PzgOZOGQ0k

    Room151 1 week ago

    ESG in liquidity: Sponsored article: Gavin Haywood looks at the integration of ESG in Federated Hermes’ money market funds. Federated Hermes has over 300 public sector clients invested in our AAA rated money[...] dlvr.it/RqZX5f pic.twitter.com/E87sBXsay8

    Room151 1 week ago

    New realities of investing cash and liquidity: “What to do now?”: Sponsored article: Brian Buck looks at the “unique challenge” for cash management strategies. As investors assess the ongoing impact of the pandemic on their business, levels of cash and… dlvr.it/RqVbk9 pic.twitter.com/ZElVASmEUV

    Room151 1 week ago

    Extra finance promised by the government receives a broad welcome: Sponsored article: The financial pressures facing local authorities this year continue to pose challenges for council treasurers. While the launch of the UK’s Covid-19 vaccination… dlvr.it/RqTzTF pic.twitter.com/HCjH0pyHR5

    Room151 1 week ago

    A savvy approach to managing your cash: Sponsored article: Caroline Hedges examines the need for active cash management to achieve a higher than average return. Last year saw the already mountainous pile of negative-yielding debt around the[...] dlvr.it/RqTzMK pic.twitter.com/uP0RQYTJLt

    Room151 1 week ago

    Putting alternatives at the heart of multi-asset portfolios: Sponsored article: Nick Edwardson looks at the assets that provide the “most attractive opportunities”. We believe that asset allocation is the primary driver of investment returns and that the… dlvr.it/RqQ2Qt pic.twitter.com/WLBzvRRRUQ

    Room151 1 week ago

    Thriving in the pandemic: Avoiding the stragglers: Sponsored article: George Crowdy looks at the sectors providing opportunities for sustainable investment. Throughout much of 2020, we talked about why sustainable investing has thrived in the pandemic,… dlvr.it/RqQ2NQ pic.twitter.com/dxiPWKFsPl

    Room151 1 week ago

    The development of CCLA’s mental health benchmark: Sponsored article: Amy Browne examines the importance of investing in mental health in the workplace. We are living through a public health emergency in more ways than one. Physical health[...] dlvr.it/RqQ2Jx pic.twitter.com/o6yRSCX3oF

    Room151 2 weeks ago

    Brexit: What the EU trade deal means for the UK economy: Sponsored article: Hetal Mehta looks at the impact of Brexit on economic prospects. Four and a half years after voting to leave the EU, on Christmas Eve the UK finally[...] dlvr.it/RqLBDt pic.twitter.com/No62srfE8h

    Room151 2 weeks ago

    Cash dethroned: The quest for liquid yield: Sponsored article: Peter Hunt and George Carne ask how treasury departments can balance the need for yield and liquidity. The massive stimulus and waves of liquidity provided by central banks[...] dlvr.it/RqLBDj pic.twitter.com/05g6Zhu1kU

    Room151 2 weeks ago

    Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point: The severe pressure on local government budgets now means section 151 officers confront a tricky call on  whether they can make a judgement on the robustness… dlvr.it/RqLBDV pic.twitter.com/vTAbDKFzkI

    Room151 1 month ago

    PWLB Consultation: Analysis straight from Dickens: Helen Radall and Paul McDermott present a legal examination of the new PWLB borrowing rules as Charles Dickens might have imagined it. Free and easy PWLB (“Marley” to his friends)[...] dlvr.it/RnmwLq pic.twitter.com/yFxcPrQqEG

    Room151 1 month ago

    Room151’s top stories from a momentous year: 2020 was the year in which local government grappled with Covid-19, funding strains, controversy over borrowing rules and the threat of financial collapse. It has been an exhausting and historic[...] dlvr.it/RnlpZg pic.twitter.com/g3myNyox6J

    Room151 1 month ago

    Tracy Bingham: 2020, a year best forgotten but also one of learning: Many will rush to erase 2020 from their memories but, writes Tracy Bingham, there were also many lessons about finance teams, strategic planning and leadership. 2020: A year we’d… dlvr.it/RnlpY2 pic.twitter.com/m7G1krrtCu

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Future solar bonds to go ahead despite funding cuts
  • Next story James Bevan: Pricing the risk of Brexit

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK